The Second Opinion: The BCCA explores the Outer Limits of "Abuse of Process by Re-Litigation"
In a recent ruling, Bronson v. Tompkins Ranching Ltd., 2013 BCCA 477, the British Columbia Court of Appeal addressed one of the more difficult questions that can emerge from the application of the doctrines of res judicata and abuse of process.
It is clear that, depending on the facts at issue, both res judicata and abuse of process can be used in a second action to prevent a person (Party A) -- who was a party to a first action -- from re-litigating issues of fact or law which were conclusively determined in that first action. More specifically:
- Res Judicata: A second person (Party B) who was a party to both the first and second actions can use the doctrine of res judicata (either issue estoppel or cause of action estoppel) to prevent Party A from re-litigating matters that were settled in the first action (to which Party A was a party).
- Abuse of Process: Alternatively, Party C -- i.e., a person who is a party to the second action, but was not involved in the first action -- can rely on the abuse of process doctrine to prevent Party A from re-litigating matters that were settled in the first action (to which Party A was a party).
The question raised in Bronson is different. The BCCA was asked whether a person (Party B) who was a party to both proceedings can raise the doctrine of abuse of process to prevent a party to the second action (Party A) from re-litigating matters settled in the first action when Party A was not a party to the first action. In other words, can a stranger to litigation (i.e., the first action) be bound by findings of fact made in that first action in circumstances where the stranger becomes a party to later, related litigation?
The facts underlying the Bronson dispute flowed from an alleged breach of trust:
- At the trial of the first action, the beneficiaries of a trust successfully sued the trustee for a breach of trust relating to the trustee’s sale of shares to a third party. The trial judge in the first action made findings of fact, including findings that the shares had been sold without the consent of a co-trustee and had been sold at a price below their true value.
- In the second action, the beneficiaries sued the third party who had purchased the shares from the trustee. The beneficiaries argued that -- despite not being a party to the first action -- the third party purchaser should be forbidden from attempting to re-litigate the first trial judge’s findings that the shares had been sold improperly and at an under-value.
The trial judge in the second action correctly noted the lack of precedent addressing this issue, and ultimately rejected the argument that a stranger to the first action could be bound by a finding of fact in that first action. (Only if the stranger was in a relationship of privity with a party to the first action, or was otherwise in a position to affect the first action, or had had the ability to participate in the first action, or perhaps if the stranger had been the plaintiff in the second action, might the doctrine of res judicata or abuse of process be potentially applicable.)
The Court of Appeal affirmed the trial judge’s ruling, but -- arguably -- adopted a less definitive approach. While agreeing that it was open to the trial judge to permit the stranger to the first action to re-argue issues of fact settled in that first action, the BCCA did not explicitly rule that the application of the abuse of process doctrine could never be used to prevent re-litigation by a true stranger to the first action.
Ultimately, and perhaps regrettably, the Court of Appeal did not need to determine this issue. Between the date of the trial and the appeal of the second action, the Court of Appeal had overturned the trial ruling in the first action. As such, the findings of fact -- made by the trial judge in the first action -- no longer existed, and neither abuse of process nor res judicata could apply.
The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions. The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.
Judgments; Courts; Abuse of Process; Res Judicata